Complete success in your first business venture is rare, leaving many business owners with black marks on their credit, and often, bankruptcies. These negative parts of your credit score preclude traditional financing sources for a new business venture, so it may seem that you have few options to get your business idea off the ground. In addition, being a new business (under 2 years of history) automatically means your denied by major banks and other smaller lenders. Thankfully, there are more alternatives for business financing than ever before.
Amex Merchant Financing
American Express is one of America’s largest credit card providers, and their new merchant financing program targets small, growing businesses. Loan amounts range from $10,000 to $2 million, and can only be used for operational purpose, which excludes real estate and construction projects. The limiting factor of this financing option is that your eligibility is determined by your volume of Amex transactions over the past 12 months, a problem for brand new businesses.
Consumers increasingly turn to Paypal as an alternative to traditional banks because of the flexibility and ease of use of the platform. In response, large brick and mortar companies, like Dollar General, as well as most online retailers, accept Paypal as payment. The new Paypal working capital program infuses businesses with cash based on their Paypal transactions. You can set the amount that you want to borrow, and a percentage of all Paypal payments immediately goes to repay the loan. What makes this an attractive option for small business owners is that you pay nothing on days when you don’t make any money; however, the 90 minimum repayment threshold can be a struggle if your Paypal payments drop off.
A long-standing method of business financing, venture capitalists provide funding for companies at all stages of development. During the due diligence process, investors dig through every aspect of the business to determine its value. Funding is based on selling a portion of your equity in the company for immediate access to cash. There are no limits on the potential amount offered, but selling equity in your company can be devastating if the company becomes a huge success, or you have to ask for more than one round of funding. The other critical issue with venture capitalists is that undervaluing your company in the beginning will cost you a sizable chunk of your business, often more than you are willing to give up.
Internet communities drove the development of crowdfunding as alternative business financing. Success stories on sites like Kickstarter include: the Oculus Rift, Pebble, and even Hollywood movies. To get started all you need is a vision, creative rewards for donors, and a marketing strategy to spread the word about your funding campaign. There are many issues with crowdfunding as a source of business financing. First, if you fail to meet your funding goals, all of the money goes back to donors. Second, the cost of processing donor rewards significantly cuts into what you raised. Finally, crowdfunding depends heavily on visibility and an active donor base, things that are difficult to come by for a new business.
Painless Merchant Cash Advance
Your previous business or credit history is not necessarily indicative of the health of your current venture, and Painless Cash Advances don’t punish you for mistakes you made in the past. Generous loan terms and low monthly payments allow you to keep more of your revenue in the company, so you can grow your business, rather than paying expensive financing and interest fees.
Painless offers several loan programs, including:
- Standard and Premium Cash Advances for established merchants with significant credit card sales.
- Cash and Credit Plan based on gross sales for merchants whose customers pay primarily with cash.
- Start-Up Advances aimed at new businesses who’ve yet to establish annual credit card revenue.
All of Painless’ loans require no application fees, closing costs, collateral or tax information. All you have to provide is current, relevant information about the health of your business the day you apply.
Traditional financing options are unavailable for high risk borrowers, making alternative business financing a necessity. Contact Painless to learn more about your financing options or to apply for the cash that you need to grow your business.